The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended that the grandfathering arrangements for conflicted remuneration in relation to financial advice provided to retail clients should be removed as soon as is reasonably practicable (see recommendation 2.4).
In its response to the Royal Commission, the Government announced that it would end grandfathering of conflicted remuneration to financial advisers effective from 1 January 2021.
On 22 February 2019, the Government released the Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 (Exposure Draft Bill) for consultation. The Exposure Draft Bill removes the grandfathering arrangements for conflicted remuneration and other banned remuneration from 1 January2021. It also enables for regulations to be made to provide for the pass through to customers of the benefits of any previously grandfathered conflicted remuneration remaining in contracts after 1 January 2021.
These Draft Regulations providing details on how benefits must be passed through to the customer and also impose record keeping obligations on persons required to pass through benefits.